Uday scheme plan to boost Telangana debt
Hyderabad: The Telangana government’s decision to join the Centre’s Uday scheme for the financial turnaround of debt-ridden discoms will increase the state’s liabilities.
In January, the state government had signed an MoU with the Centre to join Ujwal Discom Assurance Yojana or Uday scheme.
Under this scheme, the state government needs to takeover 75 per cent of the discoms’ debt and guarantee discom bonds for the remaining 25 per cent of their liabilities.
Two discoms in Telangana have an accumulated loss of Rs 11,897 crore. Servicing interest payments on bonds itself would pose a major challenge to the Telangana government in the short-term as it is reeling under financial crisis due to heavy burden on account of welfare and populist schemes.
In these circumstances, servicing an additional debt burden of Rs 11,000 crore would be a major challenge in the short term. Apart from this, the TS government has to absorb the losses of discoms within two years under Uday — either by passing on the power cost to consumers or increasing the government subsidy.
If it fails to do so, the financial losses that exist after two years will be counted as part fiscal deficit of state, which will affect the state’s budget expenditure.
While it cannot afford to increase the subsidy due to financial constraints, passing the burden to consumers involves political implications in the 2019 general elections. Last year, the state government gave Rs 4,584 crore as subsidy to discoms.
However, power minister G.Jagadish Reddy said the benefits of Uday will be manifold in the long term though it would impose a burden in the short term.
“We have to bear some short-term difficulties to gain long term benefits. Once, discoms become debt-free, they would be able to spend more on quality power supply by improving transmission and distribution network and reducing T&D losses. The power costs would come down which would automatically be passed on to consumers. The Centre will give several grants to discoms to improve T&D network,” Mr Reddy added.